The Orlando Magic joined the NBA as an expansion franchise in 1989. A contest sponsored by Orlando Magic team officials and the local Orlando Sentinel newspaper allowed the community to suggest names for their new franchise. The contest of a total of 4,296 submitted entries subsequently narrowed the names to the "Heat", the "Tropics", the "Juice" and the "Magic". On July 27, 1986, it was announced that the committee chose the Magic to be the new name of the Orlando franchise in the NBA. The Magic were one of the four new expansion franchises awarded by the NBA along with the Charlotte Hornets, Miami Heat and Minnesota Timberwolves. Initially, the NBA was planning to expand by three teams, with one franchise going to Florida; however, when both Miami and Orlando ownership groups made successful pitches, the expansion committee decided to expand by four teams, allowing both to have a franchise. The Magic became the first ever major-league professional sports franchise in the Orlando area, led by William duPont III, joined with two brothers, James and Robert Hewitt, as general partners and former Philadelphia 76ers general manager Pat Williams. The expansion fee was reportedly $32.5 million.
The Magic hired Matt Guokas as the team’s first coach, who helped the Magic select twelve players in the NBA Expansion Draft on June 15, 1989. On June 27, 1989, the Magic chose Nick Anderson with the 11th pick in the first round, who became the first draft pick of the franchise. The first game the Magic played on November 4, 1989, at the Orlando Arena (O-Rena) against the visiting New Jersey Nets, who won 111- 106 in a hard-fought game. The Magic’s first victory came two days later, as the Magic defeated the New York Knicks 118–110 in Orlando. The inaugural team compiled a record of 18–64 with players including Reggie Theus, Scott Skiles, Terry Catledge, Sam Vincent, Otis Smith, and Jerry Reynolds.
In the 1990 NBA Draft, the Orlando Magic selected Dennis Scott with the fourth overall pick. On December 30, 1990, Scott Skiles racked up 30 assists in the 155–116 victory over the Denver Nuggets, breaking Kevin Porter’s NBA single-game assists record (29). Skiles was named the NBA’s Most Improved Player at the end of the season, as the Magic heralded the NBA’s most improved record that season. Forward Dennis Scott set a team mark with 125 three-point field goals for the season, the best long-distance production by a rookie in NBA history. He was named to the NBA All-Rookie First Team. Despite a 31–51 record, there were 40 sellouts out of 41 home games.
On September 19, 1991, the DeVos family purchased the franchise for $85 million and the family head Richard DeVos became the owner of the franchise. The 1991–92 season was disappointing for the Magic as various players missed games with injuries. Dennis Scott played only 18 games, Nick Anderson missed 22 games, Stanley Roberts, Jerry Reynolds, Bison Dele, Sam Vincent and Otis Smith all missed at least 27 games each. With a shortage of healthy players the team struggled through a 17-game losing streak and finished with a 21–61 record. The Magic still managed to have all 41 home games soldout.